May Mortgage lending and house sales hit all-time low

Hopes that the credit crunch would be short-lived were dashed today with the news from the British Bankers Association (BBA) that bank mortgage lending slumped 20% to reach an all-time low last month.

May Mortgage lending and house sales hit all-time low

Fewer than 28,000 new house purchase loans were approved by UK banks in May – down from 35,000 in April. Gross new mortgage lending was £16.2bn in May – a 16% fall on the same month last year with just over half of it accounted for by remortgaging.

House sales were down 37% according to stamp duty figures from HM Customs & Excise and the Royal Institute of Chartered Surveyors (RCIS) who report housing transactions at their lowest levels since 1978.

David Dooks, statistics director of the BBA, blamed the fall on ‘tighter lending criteria and economic pressures on households’

He also pointed out that credit card spending rose at the same time, while loan repayments slowed down. ‘People spent more on credit cards’, he said, ‘but repayment levels were lower than expected in May and after April’s busy month with people putting money into ISAs, personal deposits were not as strong.’

This means that actual disposable income will be less and that householders are likely to feel less well off.

About Fiona Russell-Horne

Group Managing Editor across the BMJ portfolio.

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